Nakumatt shifts focus in hunt for clients

Initially marketing itself as a high end retail chain, Nakumatt Supermarket has changed its strategy and is now going for the mass consumer market in Kenya and East Africa.

Over several months, the retail chain has made foray into the middle and lower income segment of the market where its rivals – Tuskys, Uchumi, Naivas, Ukwala and a host of other smaller retailers – already have a firm footing.

“Due to economic growth, our client base is also growing fast and expanding beyond the traditional market segment.

Such (Nairobi) areas as Donholm, Nyayo Estate, Savannah, Buru Buru, Umoja, Greenfields, GreenSpan, Simba Villa estate among others are all a very key market catchment for us,” said Nakumatt Holdings managing director Atul Shah in an e-mail interview.

A majority of its retail outlets are currently situated in high-end malls with one being the destroyed Nakumatt Westgate hypermarket in Nairobi’s Westlands.

RAPID EXPANSION

In Uganda, the supermarket opened a sixth branch in October in Katwe, an area with a mixed segment of consumers in terms of income.

Another outlet in Kampala’s Bugolobi suburb had just been opened a few weeks earlier.

The supermarket plans to open several other branches in Kisementi on the outskirts of Kampala and another at the lakeside town of Entebbe, slated before end of this year.

In Kenya, the largest retail chain in East Africa has booked space in the upcoming Shujaa Mall in Nairobi’s Donholm estate located in the expansive and highly populated Eastlands area.

Mr Shah said the proposed outlet at Shujaa Mall where it will be an anchor tenant, will actually be the fourth outlet in the Makadara/Starehe/Embakasi area in Eastlands.

“For the last five years, we have been considering various sites around South B/South C, Buru Buru, Jogoo Road and Donholm but the respective property developers have unfortunately failed to come through,” said Mr Shah.

UNSUITABLE FACILITIES

He admitted that the supermarket’s expansion has largely been constrained by lack of suitable property facilities to lease.

This has been a major let-down especially in Nairobi’s Eastlands where the concept of shopping malls is relatively new.

“We are also responding to popular customer requests quite literally.

Every week, we receive hundreds of customer requests to consider setting up branches and subject to feasibility studies and availability of suitable properties, we shall be responding favourably,” said Mr Shah adding Nakumatt is working very closely with property developers to address the lack of appropriate properties for renting.

The many potential retail consumers in this area thanks to a high population and a growing middle income segment looking for enhanced lifestyles is another attraction to many investors in the property and retail markets.  

Besides, the impending entry of global competitors like MassMart in Kenya has forced local supermarkets to make strategic expansion moves to stave off stiff competition.  

Massmart, the largest food and household goods retailer in South Africa, plans to enter the Kenyan market, having booked space at the Garden City shopping mall on Thika Road whose construction is to be completed next year. 

The chain had earlier attempted to take over Naivas Supermarket but the bid failed after talks on the deal collapsed.

It is, however, said to be in discussions with some key local players.

LOCAL NICHES

Tuskys, Naivas and Ukwala supermarkets have cut their niche in the low and medium income segment of the market.

Uchumi targets the middle income segment, but is also focused on the bottom end of the pyramid.   

Nakumatt has previously targeted the middle and high end income earners.

Massmart strategy is that of high-volume, low-margin and low-cost distribution of mainly branded consumer goods in more than 287 outlets in South Africa and 26 others in 12 countries in sub-Saharan Africa.